The worst combination possible or rising consumer prices and slowing growth rates has become a reality in the U.S.

Stagflation — a scenario when the economy contracts or grows slowly but consumer prices spike instead of falling typical of a recession — has struck the U.S. economy, noted wealth manager and Fox Business Network columnist Ed Butowski writes in a column.

"Stagflation is one of the worst economic conditions a country can be in, and the United States just entered it," Butowski writes.

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Cutting interest rates normally can end stagflation by encouraging growth to catch up with rising consumer prices, which was how the U.S. dealt with such a problem in the 1970s.

Today, however, interest rates are already low, leaving policymakers with few tools to end the damaging combination of rising prices and weak growth.

Blame structural unemployment problems as a hurdle to ending stagflation.

Unemployment rates officially stand at 8.2 percent, but that figure doesn't reflect the large number of people out of work who have grown frustrated with fruitless job searches and therefore, have quit looking.

Those who are out of work but aren't looking for jobs aren't counted as part of the labor force, yet if they were, the headline unemployment rate would be much higher.

A weak jobs market is helping to keep gross domestic product rates growing less than 2 percent a year — not enough to create demand for new jobs to absorb the country's discouraged workers.

Meanwhile prices are on the rise, especially in the grocery store and at the gasoline pump.

While overall inflation rates are set to rise around the Federal Reserve's target of 2 percent, the true cost of living is much higher than that.

"Clever manipulation of statistics by the government has avoided talks of stagflation until now. Lowering the interest rate was the best card in our hand and we played it too early. Our last options are to lower the corporate tax rate (which the government refuses to do) and practice quantitative easing (which will cause more inflation)," Butowski writes.

Quantitative easing is a monetary policy tool with which the Fed buys bonds held by banks, injecting liquidity into the economy to lower long-term interest rates, with sides effects including a weaker dollar and higher inflation rates.

"We need to take off our government blindfolds and see with clear eyes the bleak position of our economy in order to protect our livelihoods," Butowski adds.

"Sorry to say, but a severe recession is at hand and it will be around for a long time."

The U.S. economy grew 1.9 percent in the first quarter, down from a preliminary estimate of 2.2 percent, while inflation rates were flat in April.

The Standard & Poor's ratings agency, which stripped the U.S. of its AAA rating in 2011 when political bickering nearly prevented the government from raising its own debt ceiling, says the economy is fundamentally sound.

However, hefty debts, political deadlocks and a potential decline in exports to Europe should the debt crisis worsen there could send the economy south.

"We believe U.S. economic and fiscal performance remains subject to a number of significant risks, including ongoing fiscal and financial market dislocations in the European Economic and Monetary Union (euro area)," Standard and Poor's says in a note on the U.S. where it said it was sticking with a AA+ rating and a negative outlook.

"These could lower U.S. growth either through a decline in U.S. exports to the euro area or, more importantly, through second-round effects on the U.S. financial sector. Overall, we believe the risk of returning to recession in the U.S. is about 20 percent."

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